In light of the recent market downturn, certain stocks have significantly underperformed over the past year. Among these are CRISPR Therapeutics and Merck, both of which are involved in the development of innovative medical therapies. CRISPR Therapeutics has seen a 41% decline in its share value over the trailing 12 months, while Merck shares have fallen by 22%. Despite facing challenges, both companies present compelling opportunities for patient investors, particularly at their current valuation levels.
CRISPR Therapeutics
CRISPR Therapeutics, known for its specialization in gene-editing, is experiencing a downturn. Although the company gained approval for Casgevy—a treatment for two rare blood diseases—in late 2023, revenue generation from the therapy remains limited. Factors such as the high costs and complexity of administering gene-editing treatments contribute to this situation. Additionally, profits from Casgevy will be shared with Vertex Pharmaceuticals, which collaborated in its development; Vertex is entitled to 60% of the program’s profits.
Nonetheless, Casgevy has received approvals in the U.S., the U.K., the European Union, and several Middle Eastern countries, expanding the market opportunity significantly beyond what CRISPR Therapeutics could have achieved independently. The treatment, priced at $2.2 million per course, effectively serves as a one-time cure for two lifelong diseases that have severe health and financial implications for patients.
Beyond Casgevy, the company is pursuing other gene-editing treatments, including an experimental cure for type 1 diabetes and CTX112, which targets B-cell malignancies. CTX112 has received the Regenerative Medicine Advanced Therapy designation from the U.S. Food and Drug Administration, facilitating its development. With proven innovative capabilities, CRISPR Therapeutics is poised for significant clinical successes in the coming years. Despite a steep decline in share value, the stock offers potential for strong returns for investors who are willing to hold it for the long term.
Merck
Merck’s flagship medicine, Keytruda, has earned numerous indications across various cancer types globally. However, in a phase 3 clinical trial conducted in China last year, the investigational treatment ivonescimab outperformed Keytruda in treating non-small cell lung cancer patients with PD-L1 protein overexpression—a key market for Keytruda. Potential competition from ivonescimab and the impending expiry of Keytruda’s patent in 2028 pose significant challenges to Merck.
Last year, Merck reported revenues of $64.2 billion, marking a 7% increase from 2023. Keytruda’s sales accounted for $29.5 billion of this total, an 18% year-over-year increase, underscoring its significance to Merck’s revenue structure. The possibility of Keytruda losing market share raises concerns, but Merck has been preparing for such contingencies.
Efforts to extend Keytruda’s market presence involve developing a subcutaneous formulation, expected to gain indications across its original markets and maintain sales traction into the 2030s. Additionally, Merck is pursuing the development of new, superior medicines. Strategic moves include an agreement with LaNova Medicines to develop LM-299, a cancer drug similar to ivonescimab, and a collaboration with Hansoh Pharma for HS-10535, a preclinical weight management compound. Moreover, new offerings such as Winrevair for pulmonary arterial hypertension are anticipated to eventually generate substantial sales.
Merck also stands out as a reliable dividend stock, boasting a forward yield exceeding 3.4% and an 80% dividend increase over the past decade. Despite recent share value declines, Merck’s robust history of overcoming similar challenges suggests it is well-positioned to do so again, making it a strong choice for long-term investors.
